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Inventories Rise for First Time in 1 1/2 Years

July 16, 2002|From Bloomberg News

Inventories of unsold goods increased in May for the first time in 1 1/2 years as spending by retailers and wholesalers declined, government reports showed Monday.

Stockpiles at retailers, wholesalers and factories rose 0.2%, the Commerce Department said.

Retail inventories piled up at the fastest pace in almost two years because of reduced consumer spending. One reason was that General Motors Corp. and other auto makers removed no-interest financing on new cars and light trucks.

In June, retail sales rebounded, rising 1.1%, the government said Friday. That may lead to increased production.

The inventory-to-sales ratio, a measure of how long goods remain unsold, rose to 1.36 months, close to a record-low 1.35 months' worth in April. The inventory increase in May was the first since a 0.2% gain in January of last year.

Auto sales fell 3.2% in May, resulting in a 2.5% rise in the number of cars and trucks on dealer lots and in showrooms. That increase led to the largest rise in retailer inventories since June 2000.

Cars and trucks sold in May at the slowest pace in four years as consumers shunned rebates that replaced no-interest financing. May sales at General Motors fell 12%.

Auto sales rose in June as General Motors and Ford Motor Co. brought back no-interest loans. In June, car sales rebounded to a 16.5-million-vehicle annual pace from a 15.7-million-vehicle rate in May.

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